The National
Oceanic Atmospheric Administration reported Monday that the average
global temperature in May 2017 was 1.49 degrees above the 20th-century
May average of 58.6 degrees. This May was the third-hottest on record
since the organization began collecting data in 1880.

Phoenix has hit
120 only three times in recorded history — the last time 22 years ago.
The record high was 122 degrees on June 26, 1990. We hit reached 118 on
Monday, which the National Weather Service says is rare. In fact,
temperatures at that mark or higher have only been recorded 15 times
since record-keeping started in 1896.

Dozens of flights at Arizona’s Phoenix Sky Harbor airport were
delayed or canceled on Monday and Tuesday, and airlines are limiting the
number of seats sold, to prevent the planes from exceeding maximum
weight for safe takeoff in the hot conditions.

Most of the smaller,
commuter planes have a maximum operating temperature of 118 degrees.
Larger planes made by Boeing and Airbus have maximum operating
temperatures of 126 and 127 degrees, respectively.

The real problem with
flying in hot temperatures is like the problem faced in high
altitudes: thin air. Hotter air is less dense, which means there is less
air beneath the wings for lifting the aircraft and less air to flow
through the jet engines. To compensate, airlines can keep the weight
down, increase thrust, and make sure they takeoff on long runways.

Be careful out there. The main burn center in Phoenix has issued a
warning to people to be careful around car interiors and pavement.
PetSmart is offering free booties so your pets don’t burn their paws on
concrete and pavement. Stay hydrated and pray your AC doesn’t croak.

Oil prices hit a 7-month low. OPEC and non-OPEC producers have agreed
to cut production by 1.8 million barrels per day and it appears they
are complying with the deal to cut global output, but still prices are
down as other countries – not part of the agreement – are pumping more.
Both Libya and Nigeria have increased output. And US shale drillers that
are staging the longest drilling ramp-up on record.

Meanwhile traders
are hoarding an increasing amount of oil in tankers. In
the last month alone, explorers drilled 125 more wells in the Permian
Basin than they would open, meaning production is poised to surge
further when they turn the spigots on. Hedge fund managers have become
very bearish about the outlook for oil prices as production from
countries outside OPEC grows and threatens to undermine the
effectiveness of OPEC’s output controls.

Shares of oil companies were among the worst performers. The Energy
Select Sector SPDR ETF XLE, -1.28%, posting its worst one-day drop since
March. West Texas Intermediate crude, the U.S. benchmark closed at
$43.23 today, that’s down from a high of $54.45 on Feb. 23, or a 20%
decline, which is the common definition of a bear market.

In a speech in Amsterdam to a conference co-sponsored by the central banks
of Sweden and the Netherlands, Boston Fed President Eric Rosengren said
lower rates may be a more permanent feature on the economic landscape
because they reflect broad population trends.

Separately, Chicago Fed
President Charles Evans said late Monday the central bank could be done
raising rates this year. He reiterated those comments this morning on
CNBC and with The Wall Street Journal. He said he supports the current
policy of “very gradual” interest-rate hikes and a slow reduction of the
balance sheet. Evans said it was important that financial markets
realize that inflation can exceed the Fed’s 2% target from
time-to-time.

Earlier on Monday, New York Fed President William
Dudley struck a hawkish tone, arguing against slowing the pace of
interest-rate increases.

Federal Reserve Vice Chairman Stanley Fischer
said that he was worried memories might be fading about the pivotal
role housing played in the financial crisis. Fischer said, “House prices
are now high and rising in several countries, perhaps because of extended period of low interest rates.”

Fischer noted that U.S.
government’s role in housing is increasing with Fannie Mae, Freddie Mac
and the Federal Housing Administration “now the dominant providers of
mortgage financing.” The Fed’s #2 said “there is more to be done” to
strengthen the resilience of the housing finance systems. Just taking
the possibility of severe stress seriously would help, he said. And
government support for housing should always be made explicit.

The U.S. current-account deficit,
a measure of the nation’s debt to other countries, rose 2.5% to $116.8
billion in the first quarter. The increase in the current-account
deficit in the fourth quarter was tied to a higher trade deficit in
goods such as foreign autos or cellphones and a smaller surplus in
primary income — returns on American-owned assets held abroad.

The
fourth-quarter gap in the current account was raised to $114 billion.
The current-account deficit was 2.5% of GDP in the first quarter, up
slightly from 2.4% at the end of 2016. The gap is well below a peak of
6.3% in 2005.

Ford Motor
will move some production of its Focus small car to China and import
the vehicles to the United States. Ford painted the production shift
from Mexico to China, slated in mid-2019, as a purely financial move
that will save the company $500 million in reduced tooling costs.

The
decision also signals a shift in strategy at Ford, which is responding
to dwindling U.S. consumer demand for small cars in favor of more
expensive and more profitable trucks and SUVs. Ford said it would invest
$900 million at the Kentucky truck plant to build the redesigned
Navigator and Ford Expedition. It has contingency plans to build more of
the big SUVs at an Ohio plant if demand grows.

The current Focus will
be phased out of production in Wayne, Michigan in mid-2018, according to
Hinrichs. The Wayne plant will begin building a new Ranger midsize
truck in late 2018 and a Bronco midsize SUV in 2020.

MSCI
said it plans to add mainland Chinese shares to its benchmark emerging
markets index. MSCI will add 222 China A Large Cap stocks on a gradual
basis beginning next year. The addition of the mainland Chinese shares
could be a big boost to the world’s second-largest stock market, which
has until now drawn limited foreign investor interest because of high
volatility, frequent trading halts and limited foreign investor access
to the Shanghai and Shenzhen stock markets.

The iShares MSCI Emerging
Markets ETF (EEM) rose 0.15 percent in after-hours trade. The MSCI
Emerging Markets Index is tracked by an estimated $1.6 trillion in
assets, as of the end of June last year.

A man killed in a crash last year while using the semi-autonomous driving
system on his Tesla Model S sedan kept his hands off the wheel for
extended periods of time despite repeated automated warnings not to do
so.

The National Transportation Safety Board (NTSB) released 500 pages
of findings into the May 2016 fatal crash. The incident raised questions
about the safety of systems that can perform driving tasks for long
stretches with little or no human intervention, but which cannot
completely replace human drivers.

Legislation to impose new sanctions on Russia and Iran
that passed the U.S. Senate nearly unanimously last week has run into a
procedural problem that could prevent a quick vote in the House of
Representatives. The Countering Iran’s Destabilizing Activities Act,
which also includes new sanctions against Russia, passed the Senate 98-2
last week.

But the measure must still pass the House before it can be
sent to Trump to sign into law, or veto, and the House parliamentarian
found that the legislation violated a constitutional requirement that
any bill that raises revenue for the government must originate in the
House, something known as a “blue slip” violation.

The Russian ruble
just had its worst back-to-back days since February 2016, falling 5.68
percent, as the drop in oil and broadened US sanctions took a toll.
Russian stocks entered a bear market last week after the U.S. Senate voted overwhelmingly to expand penalties against Russia.

Barclays and
four former executives were charged with conspiracy to commit fraud
during the bank’s 2008 capital raising from Qatar as it sought to avoid a
bailout. The four men are the most senior British banking executives
charged since the financial crisis and include former Chief Executive
Officer John Varley, former chairman of investment banking for the
Middle East Roger Jenkins, ex-wealth chief Thomas Kalaris, and Richard
Boath, the former European head of the bank’s financial institutions
group.

The details are still a bit sketchy but it looks like Barclays
gave Qatar a loan and then Qatar made what was presented as an equity
investment to regulators. Qatar got a fee for going along with the ruse
and Barclays avoided a bailout.

After the closing bell, FedEx
reported a higher-than-expected quarterly profit, as the package
delivery company benefited from its TNT Express acquisition and higher
sales across its express, ground and freight business units. FedEx said
profit will climb as much as 14 percent in the current fiscal year as
the courier benefits from a recent jump in prices and package
deliveries.

The outlook underscored the potential payoff from FedEx’s
heavy investments in fiscal 2017 to handle more of the surge in
e-commerce deliveries. The air-freight pioneer, an economic bellwether
because of the variety of shipments it carries, is also poised to gain
from a stronger worldwide economy.

Disclaimer: The material appearing on this site is based on data and information from sources we believe to be accurate and reliable. However, the material is not guaranteed as to accuracy nor does it purport to be complete. Opinions and projections, both our own and those of others, reflect views as of dates indicated and are subject to change without notice. The contributions and opinions of others do not necessarily reflect the views of Marvin Clark, Monsoon Wealth Management, or Fixed Income Daily. Nothing appearing on this site should be considered a recommendation to buy or to sell any security or related financial instrument. Investors should discuss any investment with their personal investment counsel. Past performance does not guarantee future results.